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Exhibit 10.1
SECURED PROMISSORY NOTE
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$666,666.00 Date: November 17, 2000
FOR VALUE RECEIVED, the undersigned, Jeffrey A. Cole,
("Borrower"), hereby unconditionally promises to pay to the order of Cole
National Corporation, a Delaware corporation (the "Company"), the principal sum
of Six Hundred Sixty-Six Thousand Six Hundred Sixty-Six Dollars and 00/100
($666,666.00) in lawful money of the United States of America and in immediately
available funds, on January 18, 2004 and to pay simple interest (computed on the
basis of a 365 day year) on the unpaid principal amount hereof from and after
the date of this Secured Promissory Note until the entire principal amount
hereof has been paid in full, at the rate of 6.01% per annum. Interest is
payable on each anniversary of the date of this Secured Promissory Note with
respect to the period ending on such anniversary, and at maturity or upon full
prepayment of the principal hereof. Not later than five business days prior to
the date on which payment of interest is due, the Company shall give written
notice to the Borrower of the amount of the payment due on such date.
For purposes of this Promissory Note, a "business day" shall
mean any day other than a Saturday, Sunday or federal holiday and shall consist
of the time period from 12:01 a.m. through 12:00 Midnight Eastern time.
This Secured Promissory Note is delivered as payment of the
principal amount of that certain Amended and Restated Secured Promissory Note
dated March 15, 1998 from Borrower to Company. Payment of the principal and
interest on this Secured Promissory Note is secured with the property ("Pledged
Security") pursuant to the terms of the Stock Pledge and Security Agreement
dated November 17, 2000 between Borrower and the Company. This Secured
Promissory Note is subject to the following further terms and conditions:
1. PAYMENT AND PREPAYMENT.
(a) If the Borrower or any of his Permitted Transferees shall
sell any of the Pledged Security, such sale shall be made only
for cash, and Borrower agrees to promptly deliver to the
Company the consideration received by the Borrower on such sale
of shares of Stock (net of any taxes due as a result of such
sale) as partial payment of the unpaid
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principal and accrued and unpaid interest on this Secured
Promissory Note until this Secured Promissory Note is paid in
full. In the event this Secured Promissory Note is not paid in
full, Borrower shall provide additional collateral in the event
the value or principal amount of the remaining Pledged Security
is less than the unpaid principal of this Secured Promissory
Note.
(b) All payments of principal and interest on this Secured
Promissory Note shall be made to the Company or its order in
lawful money of the United States of America and in immediately
available funds at the offices of the Company at its then
principal place of business (or at such other place as the
holder hereof shall notify Borrower in writing). Borrower may,
at his option, prepay this Secured Promissory Note in whole or
in part at any time or from time to time without penalty or
premium. Any prepayments of any portion of the principal amount
of this Secured Promissory Note shall be accompanied by payment
of all interest accrued but unpaid hereunder.
(c) Concurrently with any payment of any portion of this
Secured Promissory Note pursuant to paragraph 1(a) hereof or
any prepayment of any portion of the principal amount of this
Secured Promissory Note pursuant to paragraph 1(b) hereof, the
Company shall make a notation of such application or payment on
this Secured Promissory Note. If full payment of all unpaid
principal of and accrued and unpaid interest on this Secured
Promissory Note is made, this Secured Promissory Note shall be
cancelled. Any partial payment or prepayment shall be applied
first to accrued and unpaid interest hereon and then to the
unpaid installments of principal hereof in the inverse order of
their maturity.
(d) Borrower, at Borrower"s sole election, may repay any or all
of the unpaid principal amount of or interest on this Secured
Promissory Note, by delivery to the Company of Cole National
Group, Inc. 9-7/8% Senior Notes due 2006 or Cole National
Group, Inc. 8-5/8% Senior Notes due 2007, (collectively, the
"Bonds") in either case owned by Borrower, having a principal
amount equal to the principal amount or interest to be so
repaid, notwithstanding the prices at which the Bonds may trade
in the public markets. However, the foregoing sentence will not
apply, and Borrower will have no right to repay this Secured
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Promissory Note by delivery of Cole National Group, Inc.
Senior Notes, if, at the time of delivery to the Company, Cole
National Group, Inc. is in default under the indentures
pursuant to which the Senior Notes were issued. Unless an
Event of Default shall have occurred, all interest paid on the
Bonds shall belong to Borrower.
2. CONVERSION DEMAND NOTE. In the event Borrower shall cease
to be employed by the Company as the result of:
(a) his death or permanent disability, then the unpaid
principal of and accrued and unpaid interest of this Secured Promissory
Note ("Unpaid Amounts") shall upon demand by the Company given in
writing to the Borrower or his estate become due and payable one year
from the date of such notice; or
(b) his voluntary termination of employment with the consent
of the Board of Directors of the Company or through termination without
cause, then the Unpaid Amounts shall upon demand by the Company given
in writing to the Borrower become due and payable one year from the
date of such notice; or
(c) his voluntary termination of employment without the
consent of the Board of Directors of the Company or his termination by
the Company with Cause (as defined in the Employment Agreement
("Employment Agreement") dated December 17, 1998 between the Company
and Borrower), then the Unpaid Amounts shall upon demand by the Company
given in writing to the Borrower become due and payable thirty (30)
days from the date of such notice; or
(d) a "Change In Control" as defined in Employment Agreement
triggering a payment to Borrower thereunder, then upon demand by the
Company given in writing to the Borrower the Unpaid Amounts shall be
paid in full at or prior to the time any Change in Control payment is
made to Borrower.
Notwithstanding anything in this Section 2, in no event shall the
Unpaid Amounts be due and payable later than January 18, 2004.
3. EVENTS OF DEFAULT. Upon the occurrence of any of the
following events ("Events of Default"):
(a) Failure to pay any principal of this Promissory Note,
including any prepayments required hereunder, when due which
shall remain unremedied for forty-five (45) days after notice
by the Company given in writing to the Borrower; or
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(b) Failure to pay any interest due under this Secured
Promissory Note which shall remain unremedied for forty-five
(45) days after notice by the Company given in writing to the
Borrower; or
(c) A petition is filed by or against the Borrower seeking the
entry of an order for relief under the bankruptcy laws of the
United States, as now or hereafter amended or supplemented, or
there is an appointment of a permanent receiver or a permanent
trustee of all or substantially all the property of the
Borrower or an assignment is made by the Borrower for the
benefit of creditors;
then, and in any such event, the holder of this Secured Promissory Note may
declare, by notice of default given to Borrower, the entire principal amount of
this Secured Promissory Note to be forthwith due and payable, whereupon the
entire principal amount of this Secured Promissory Note outstanding and all
accrued and unpaid interest shall become due and payable without presentment,
demand, protest and notices of any kind or of dishonor, all of which are hereby
expressly waived. Upon the occurrence of an Event of Default, the accrued and
unpaid interest hereunder shall thereafter bear the same rate of interest as the
principal hereunder, but in no event shall such interest be charged which would
violate any applicable usury law. If an Event of Default shall occur hereunder,
Borrower shall pay costs of collection, including reasonable attorneys' fees,
incurred by the holder in the enforcement hereof.
No delay or failure by the holder of this Secured Promissory
Note in the exercise of any right or remedy shall preclude other or future
exercise thereof or the exercise of any other right or remedy.
4. ADDITIONAL RESTRICTIONS UPON OCCURRENCE OF AN EVENT OF
DEFAULT. In case an Event of Default shall occur and be continuing, the Borrower
agrees that he will not, without the prior written consent of the Company (which
consent shall not be unreasonably withheld), sell, assign, transfer, exchange,
or otherwise dispose of, or grant any option with respect to, any of the Pledged
Security (except for the purpose of curing any Event of Default hereunder)
pursuant to Section 1(a) hereof, nor will he create, incur or permit to exist
any pledge, lien, mortgage, hypothecation, security interest, charge, option or
any other encumbrances with respect to any of the Pledged Security, or any
interest therein, or any proceeds thereof.
5. MISCELLANEOUS.
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(a) The provisions of this Secured Promissory Note shall be
governed by and construed in accordance with the laws of the
State of Delaware, without regard to the conflicts of laws
rules thereof.
(b) All notices and other communication hereunder shall be in
writing and will be deemed to have been duly given if
delivered in person or mailed by certified mail or guaranteed
overnight delivery service to the Company at its principal
executive offices and to the Borrower at the last address
reflected in the Company's records.
(c) The paragraph headings contained in this Promissory Note
are for reference purposes only and shall not affect in any
way the meaning or interpretations of the provisions thereof.
IN WITNESS WHEREOF, this Secured Promissory Note has been duly
executed and delivered by Borrower on the date first written above.
/s/ Jeffrey A. Cole
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Borrower: Jeffrey A. Cole
Witness:
/s/ Cristina C. Garrett
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Cristina C. Garrett
